Thursday, December 19, 2019

EMPLOYMENT LAW QUARTERLY | Volume XXI, Issue iv

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Access Denied: NLRB Allows Employers to Bar Nonemployees Access to Property for Protests, Picketing, or Boycotts

By Patrick J. Hoban*

In a recent win for employers, the National Labor Relations Board (“NLRB”) ruled that if a nonemployee is engaged in protests, picketing, or boycotts on an employer’s property, the employer can have the nonemployee removed and bar the nonemployee from the property. Kroger Limited Partnership I Mid-Atlantic, 368 NLRB 64 (2019). This is true even if the employer allows non-protesters on its property for certain types of other activities, such as collecting donations.

The Kroger case arose after managers of a supermarket called the police to remove nonemployee union representatives from the supermarket’s parking area. The union representatives were collecting customers’ signatures for a petition protesting the transfer of union members employed by the supermarket. The supermarket previously permitted other groups and organizations to utilize the parking area to collect donations and provide information to customers. Accordingly, a NLRB Administrative Law Judge (“ALJ”) found that the supermarket illegally discriminated against the union representatives by singling them out and barring them from obtaining signatures merely because they were union representatives.

On appeal, the NLRB reversed the ALJ’s decision and found that the ALJ improperly relied upon a 1999 decision that contained a flawed and overly broad definition of “discrimination.” The NLRB clarified that under the appropriate standard, discrimination is defined as “unequal treatment by employers of activities that are ‘similar in nature.’” Using this standard, the NLRB held that employers may bar someone who is protesting, picketing, or boycotting from employer property while still permitting non-protesters on the property. Importantly, the NLRB ruled that employers specifically can bar nonemployees from access to company property for union purposes so long as the employer also bars “comparable organizational activities” by nonunion groups.

In reaching its decision, the NLRB explained that protesting and boycotting are not sufficiently similar activities to charitable, civic, or commercial activities. Without the sufficiently similar link, no finding of discrimination based on disparate treatment can occur. To successfully argue discrimination based on disparate treatment, the union would need to prove that the supermarket previously allowed other nonemployees to encourage customers to boycott or protest the store.

This NLRB decision provides significant reinforcement of employer property rights and useful clarification as to what constitutes discrimination against union representatives. As the NLRB continues to define employer rights, employers should consult with counsel regarding the legal implications of their actions, including enforcing their property rights.

*Patrick J. Hoban, an OSBA Certified Specialist in Employment and Labor Law, regularly represents employers before the NLRB. If you have questions about this NLRB decision or employer rights more generally, please contact Pat at pjh@zrlaw.com or (216) 696-4441.



Fingerprints and Legal Settlements: The Evolving Law of Biometric Technology

By Tiffany S. Henderson*

Biometric technology involves the use of body measurements and calculations of physical characteristics, such as a person’s fingerprint, voiceprint, or face scan, for identification, security, and other purposes. The use of biometric technology to monitor and manage employer workforces has become increasingly common, especially for time-tracking purposes. As technology and the law develop, employers that use or plan to use biometric technology should pay close attention to privacy laws that implicate the use of biometric technology. Although Ohio has not enacted a law governing employers’ use of biometric technology, court decisions applying laws in other states have illustrated the issues and liabilities facing employers in this evolving area.

For example, a federal district court rejected an employer’s attempt to dismiss an employee’s lawsuit alleging violations of Illinois’ Biometric Information Privacy Act (“BIPA”). Rogers v. CSX Intermodal Terminals, Inc., No. 1:19 C 2937, 2019 U.S. Dist. LEXIS 151135 (N.D. Ill. Sep. 5, 2019). BIPA requires private employers in Illinois to protect employees’ “biometric identifiers,” i.e., “retina or iris scans, fingerprints, voiceprints, or scans of hand or face geometry,” and employee’s “biometric information,” which includes any information, regardless of how it is captured, that is based on an individual’s biometric identifier and is used to identify an individual. The law specifically requires employers to: (1) provide prior notice of the purpose for which the data is collected and the length of time that it will be used or stored; (2) establish a written policy explaining the retention schedule and develop guidelines for permanently destroying the information; and (3) obtain written consent before collecting biometric information. For negligent violations, employers may have to pay liquidated damages of $1,000 or actual damages, whichever is greater. Intentional or reckless violations may result in liquidated damages of $5,000 or actual damages, whichever is greater.

In Rogers, the employer required its truck drivers to scan their fingerprints to gain access to its facilities in order to pick up and deliver freight. According to the lawsuit, prior to obtaining and using its employees’ fingerprints, the employer did not provide notice or a written policy, nor did the employer obtain employees’ written consent. Based on these allegations, one of the company’s former truck drivers filed a class action lawsuit alleging violations of BIPA. In response, the employer filed a motion to dismiss arguing, in part, that the employee’s rights were not violated because he voluntarily provided his fingerprints.

Relying on a recent decision by the Illinois Supreme Court, the Rogers Court rejected the employer’s arguments and explained that the purpose of BIPA is to impose safeguards before problems occur. Notably, in order to assert a viable claim under BIPA, the Court held “an individual need not allege some actual injury or adverse effect, beyond a violation of his or her rights under BIPA.” Accordingly, even though the employee knew his fingerprints were being collected and could have withheld his consent if he wanted, the Court found this to be irrelevant to the issue of whether he could pursue a claim for a violation of his rights. The Court noted that “biometrics are unlike other unique identifiers because they are biologically unique to the individual and once compromised, the individual has no recourse.”

The Rogers decision provides important guidance for employers as to the potential risks associated with the use of employee biometric data. Other states, including Texas and Washington, have statutes similar to BIPA which govern the use of biometric data. In addition, it is likely that more states will implement similar laws. To ensure compliance with these laws, employers should consult with counsel and consider implementing safeguards. This may include developing and maintaining a written policy governing the use and storage of biometric data, explaining the purpose for using the data, and setting forth a schedule for the retention and destruction of the data. Likewise, prior to collecting any biometric data, employers should provide written notice to employees and obtain employees’ written consent to collect and use their biometric data. Employers also should develop security procedures to protect employee information, including implementing safeguards and protocols in the event of a data breach. Even in states that currently lack laws directly governing the use of employee biometric data, employers may reduce the risk of future litigation by applying these tips.

*Tiffany S. Henderson practices in all areas of labor and employment law. If you have questions about biometric information or other employment issues, please contact Tiffany at tsh@zrlaw.com or (216) 696-4441.



Get “Giggy” With It: California Governor Signs Worker Misclassification Bill into Law

By Jantzen D. Mace*

On September 18, 2019, California Governor Gavin Newsom signed into law a bill limiting when businesses and companies can classify employees as independent contractors. “Assembly Bill 5 is landmark legislation for workers and our economy. It will help reduce worker misclassification – workers being classified as ‘independent contractors’ rather than employees,” Governor Newsom said. The author of Assembly Bill 5, Assemblywoman Lorena Gonzalez of San Diego, said in a statement: “As one of the strongest economies in the world, California is now setting the global standard for worker protections for other states and countries to follow.”

But not everyone is happy. Gig companies like Uber, Lyft, and DoorDash, which rely on thousands of independent contractors, plan to spend upwards of $90 million combined on a ballot initiative to overturn the law. While this is no small price, the companies could ultimately spend much more if forced to reclassify their workers as employees who are entitled to set wages and benefits.

Assembly Bill 5, effective January 1, 2020 codifies the California Supreme Court’s 2018 decision in Dynamex Operations West v. Superior Court, 4 Cal. 5th 903 (2018). The Dynamex lawsuit involved claims that the company unlawfully classified its delivery drivers as independent contractors as the company previously classified drivers as employees. The Court applied the “ABC test” and ruled in the drivers’ favor, finding that companies could no longer reclassify workers at their discretion. With the signing of Assembly Bill 5, the ABC test became a state-mandated test for worker classification in California.

Under the ABC test, workers are presumed employees unless they pass each of the three branches of the test: (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work; (B) the worker performs work outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently-established trade, occupation, or business of the same nature as the work performed. If the worker “passes” these three requirements, then a company can classify them as an independent contractor.

A number of professions are exempt from reclassification under this new law, including cosmetologists, commercial fishermen, and real estate agents. Importantly, this list does not include gig workers. Additionally, the California legislature approved a companion bill, Assembly Bill 170, which offers a one-year exemption for newspaper distributors and carriers who are under contract with a publisher. Governor Newsom approved the bill on October 2, 2019 and signed it into law in the same week as a number of other worker-friendly laws aimed at improving worker conditions and combating sexual harassment at work.

These new laws also end mandatory arbitration provisions in California workers’ contracts. Assembly Bill 51 now makes it a criminal misdemeanor to require workers to waive their right to sue over violations of employment statutes as a condition of employment. Also among the bills signed into law are Assembly Bill 547 and Senate Bill 530, which require state agencies to create sexual violence and harassment prevention training requirements in the construction industry and for janitorial employers. The Governor also approved other bills including: Senate Bill 142, which requires employers to provide a lactation room for mothers, and Assembly Bill 9, which extends the deadline to file workplace harassment or discrimination claims from one year to three years. This series of pro-worker laws came just weeks after Governor Newsom signed Assembly Bill 5.

While Assembly Bill 5 only applies in California, both labor groups and gig companies anticipate it having national implications. Ohio, like many other states, uses a “totality of the circumstances” multi-factor analysis to determine whether an employer may classify a worker as an independent contractor. Ohio courts look to the following six factors: (1) the permanency of the relationship; (2) the degree of skill required; (3) the worker’s investment in equipment; (4) the worker’s opportunity for profit or loss; (5) the degree of the employer’s control; and (6) whether the service rendered is integral to the employer’s business. With the signing of Assembly Bill 5, employers in Ohio and other states should collaborate closely with employment counsel as worker classification laws continue to develop.

*Jantzen D. Mace, a member of the firm’s Columbus office, practices in all areas of labor and employment law. For more information about worker classification or other labor and employment issues, please contact Jantzen at jdm@zrlaw.com or (614) 224-4411.



New Year, New Wages: Minimum Wage Increases in Several States

By Julia G. Ross*

At the beginning of the New Year, several states, including Ohio, will increase their minimum wage. In Ohio, the minimum wage will increase by fifteen cents per hour from $8.55 to $8.70 for non-tipped employees and by five cents per hour from $4.30 to $4.35 for tipped employees. Ohio’s law applies to employers with gross revenue of $319,000.00 or more. Ohio employers grossing less than $319,000.00 are only required to pay the federal minimum wage, which is $7.25 per hour for non-tipped employees and $2.13 per hour for tipped employees. Additionally, Ohio employers only are required to pay minors age fifteen or younger the federal minimum wage.

Some states will not wait for the New Year to increase wages. On December 31, 2019, New York fast food employees outside of New York City will see a minimum wage increase to $13.75 per hour, and other New York employees will see an increase to $11.80 per hour. Other states will see increases later in 2020. For example, Delaware’s minimum wage will increase to $9.75 per hour on October 1, 2020.

Recently, states have been moving towards the “Living Wage” and “$15 Minimum Wage Initiative.” A number of states, including California, Maryland, Massachusetts, New Jersey, and New York have passed bills that will increase their minimum wage to approximately $15.00 per hour in the coming years.

Employers also should be aware that some municipalities have local laws setting higher minimum wages than the state minimum wage.

The following table includes increases to state minimum wages in 2020 (unless otherwise noted, all increases are effective January 1, 2020):

STATE
NON-TIPPED
TIPPED
Alaska
$10.19
$10.19
Arizona
$12.00
$9.00
Arkansas
$10.00
$2.63
California
$13 for larger employers;
$12 for smaller employers
$13 for larger employers;
$12 for smaller employers
Colorado
$12.00
$8.98
Connecticut (effective 9/1/2020)
$12.00
$6.38
Delaware (effective 10/1/2020)
$9.75
$2.23
District of Columbia (effective 7/1/2020)
$15.00
$5.00
Florida
$8.56
$5.54
Illinois
$9.25
$5.55
Maine
$12.00
$6.00
Maryland
$11.00
$3.63
Massachusetts
$12.75
$4.95
Michigan
$9.65
$3.67
Minnesota
$10.00 for larger employers;
$8.15 for smaller employers
$10.00 for larger employers;
$8.15 for smaller employers
Missouri
$9.45
$4.73
Montana
$8.65
$8.65
Nevada (effective 7/1/2020)
$9.00 for employees without healthcare benefits;
$8.00 for employees with healthcare benefits
$9.00 for employees without healthcare benefits;
$8.00 for employees with healthcare benefits
New Jersey
$11.00 for larger employers;
$10.30 for seasonal, agricultural, and small employers
$3.13
New Mexico
$9.00
$2.35
New York (effective 12/31/19)
$13.75 for fast food employees;
$11.80 for other employees
$7.85 for food service employees;
$9.85 for other service employees
Ohio
$8.70 for large employers;
$7.25 for small employers
$4.35
Oregon (effective 7/1/2020)
$13.25 for Portland metro area;
$12.00 for urban counties;
$11.50 for rural counties
$13.25 for Portland metro area;
$12.00 for urban counties;
$11.50 for rural counties
South Dakota
$9.30
$4.65
Vermont
$10.96
$5.48
Washington
$13.50
$13.50

*Julia G. Ross practices in all areas of labor and employment law. For more information about minimum wage and other wage and hour questions, please contact Julia at jgr@zrlaw.com or (216) 696-4441.



Z&R SHORTS


Please join Z&R in welcoming David Posner, Julia Ross, and Jantzen Mace to its Employment and Labor Groups


David Posner is a trial lawyer that has litigated numerous jury trials to completion during his illustrious career. For over 30 years, he has represented publicly-traded and privately-owned companies in all aspects of employment and labor law including discrimination, retaliation, harassment, wrongful discharge, and wage and hour matters. He has extensive experience litigating cases involving the misappropriation of trade secrets and violations of non-compete and non-solicitation agreements under state and federal law. David also has a broad range of experience counselling employers and drafting employment related agreements. David is certified by the Ohio State Bar Association as a specialist in Labor and Employment Law. Best Lawyers in America© has recognized him in the areas of labor and employment litigation as well as management-side employment law. He is a recognized practitioner in labor and employment law in Ohio by Chambers USA and has been named a “Super Lawyer” since 2012.

Julia Ross practices out of Z&R’s Cleveland office. She represents public and private sector employers in all aspects of labor and employment law. Julia graduated from the University of Rochester in 2016 and received her Juris Doctor from Case Western Reserve University School of Law in 2019. As a law student, Julia was an Executive Notes Editor for Health Matrix: Journal of Law-Medicine, was the President of the Jewish Law Students Association, and worked in the public, private, and health-care law sectors with a focus on employment law. Julia was also the Noah Webster Law Scholar and the Eudese and Elmer Paull Prize Winner.

Jantzen Mace practices out of Z&R’s Columbus office. His practice encompasses all aspects of labor and employment law. Jantzen graduated from Miami University (OH) in 2012 and received his Juris Doctor from the Ohio State University Moritz College of Law in 2019. As a law student, Jantzen earned a Certificate in Alternative Dispute Resolution through his completion of additional classes and work experience in Arbitration, Negotiation, and Mediation.

Please join Z&R in congratulating its attorneys for the following achievements:


Ohio Super Lawyers Top 100 List and Cleveland Top 50 List:

Andrew Zashin

Super Lawyers List 2020:

George Crisci, Jon Dileno, Deanna DiPetta, Jonathan Downes, Michele Jakubs, Drew Piersall, David Posner, Christopher Reynolds, Jonathan Rich, Patrick Watts, Jeffrey Wedel, Stephen Zashin, and Andrew Zashin.

Rising Stars List 2020:

Amy Keating, David Vance, and Kyleigh Weinfurtner.

Upcoming Speaking Engagements


April 17, 2020
Jonathan J. Downes presents “Workplace Challenges: Civility, Bullying, Harassment, and Discrimination” at the State Personnel Board of Review (“SPBR”) Conference. The SPBR Conference will take place at the Crowne Plaza Columbus North-Worthington in Columbus, Ohio. Information regarding the SPBR Conference can be found here.
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Wednesday, December 18, 2019

NLRB ISSUES DECISIONS THAT ESTABLISH A “DECEMBER TO REMEMBER”

The National Labor Relations Board (the “Board”) is having a ‘fire sale’ this week on controversial decisions from the Obama-era Board – and it seems that everything must go!

In back-to-back decisions issued this week, the Board overruled its prior decisions on three high-profile, controversial issues (with an expectation of more to come), including: employer confidentiality rules for workplace investigations, the use of employer e-mail systems for protected concerted activity, and obligations to continue “checking off” union dues after the expiration of a labor agreement.


  • In Unique Thrift Store, 368 NLRB No. 144 (2019), the Board overturned a 2015 decision (Banner Estrella Medical Center) that had effectively barred employers from requiring “confidentiality” of workplace investigations, even in situations involving sensitive issues like sexual harassment that are covered not by the National Labor Relations Act, but by various employment anti-discrimination laws. Under Banner Estrella, employers were required to prove, on a case-by-case basis, that the integrity of an investigation would be compromised without confidentiality, which was practically impossible to do. Under the new standard, the Board ruled that investigative confidentiality rules limited to the duration of the investigation are presumptively lawful.
  • In Rio All-Suites Hotel and Casino, 368 NLRB No. 143 (2019), the Board overturned its highly controversial 2014 decision in Purple Communications, Inc. In Purple Communications, the Board had held that employees with access to their employer’s email system for work-related purposes have a presumptive right to use that system, on nonworking time, for union-related activities. This week’s Rio All-Suites decision effectively reinstates the holding of an earlier Board decision (Register Guard) and re-establishes employers’ rights to restrict the use of their email systems (on a nondiscriminatory basis).
  • In Valley Hospital Medical Center, 368 NLRB No. 139 (2019), the Board overruled a 2015 decision (Lincoln Lutheran of Racine) that addressed an employer’s dues checkoff obligations during the hiatus between labor agreements. Valley Hospital restores a precedent that had been in place since the Board’s decision in Bethlehem Steel in 1962. Under the longstanding (and now revived) standard, an employer’s statutory obligation to “check off” union dues ends upon expiration of the collective-bargaining agreement containing the checkoff provision.

This week’s decisions come in the last days of Board Member Lauren McFerran’s term, which ended on December 16, 2019. McFerran – an Obama-era holdover and the Board’s last remaining Democrat – became a fervent and vocal dissenter as the Board’s majority discarded multiple initiatives of the Obama-era Board. Many of the precedents targeted by the Board’s three Republican members – William J. Emanuel, Marvin E. Kaplan, and Chairman John Ring – were themselves major departures from years (and even decades) of Board law.

The Board’s decisions this week will undoubtedly have a substantial and far-reaching impact for both employers and employees. However, these seismic shifts in Board precedent were not entirely unexpected. In December 2017, the Board’s newly-installed General Counsel Peter Robb signaled in a “General Counsel Memorandum” (No. 18-02) that the Board might be seeking an “alternative analysis” of any number of controversial precedents – including the three decisions that the Board overruled this week. There are still numerous controversial cases on G.C. Robb’s list, so further developments in federal labor law may be on the horizon in 2020.

The Board commonly releases a string of significant decisions during the final weeks of the calendar year, particularly when (as here) a member’s term is about to expire. Two years ago (as then Board Chairman Philip Miscimarra’s term was about to end), the Board issued its landmark decisions in Boeing 365 NLRB 10 No. 154 (2017) (adopting a new balancing test for the lawfulness of employer work rules) and the ill-fated Hy-Brand Industrial Contractors, Ltd. 365 NLRB No. 156 (2017) (reinstating the historical test for joint employer status). Hy-Brand was later vacated by the Board after an inspector general report that faulted Board member Emanuel for his participation on the case. The Board turned to formal rulemaking to address the joint-employer issue instead, and it is widely expected to issue a Final Rule on joint employment in the coming weeks (all-but certain to be a carbon-copy of the defunct Hy-Brand standard).

Zashin & Rich Co., L.P.A. will continue to monitor new developments as the Board wrangles with challenging issues that affect day-to-day labor-management for our clients. If you have any questions about the Board’s recent decisions on confidentiality rules, e-mail systems, or dues deductions, please contact our offices in Cleveland (George Crisci gsc@zrlaw.com) and Columbus (Jonathan Downes jjd@zrlaw.com).
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Friday, December 13, 2019

ZASHIN & RICH NABS EMPLOYMENT PRO – The Employment & Labor Group Welcomes David A. Posner

Zashin & Rich is proud to announce the addition of seasoned employment litigation pro David A. Posner to its Employment & Labor Group. David previously worked as a partner at Baker & Hostetler for the last 15 years. David is a trial lawyer that has litigated numerous jury trials to completion during his illustrious career. For over 30 years, he has represented publicly-traded and privately-owned companies in all aspects of employment and labor law including discrimination, retaliation, harassment, wrongful discharge, and wage and hour matters. He has extensive experience litigating cases involving the misappropriation of trade secrets and violations of non-compete and non-solicitation agreements under state and federal law. David also has a broad range of experience counselling employers and drafting employment related agreements.

Stephen Zashin, Co-managing Partner and Chair of the Employment & Labor Group said: “This is a huge get for us. I have known David during my entire legal career. David is a cutting edge, aggressive and client focused attorney who fits perfectly with how we serve our clients. We are thrilled that David has sought to expand his practice and grow with us.”

David is certified by the Ohio State Bar Association as a specialist in Labor and Employment Law. Best Lawyers in America© has recognized David in the areas of labor and employment litigation as well as management-side employment law in Ohio, and he is a recognized practitioner in labor and employment law in Ohio by Chambers USA. David has been named a “Super Lawyer” from 2012 to present. He formerly served as the co-chair of an AmLaw 100 law firm’s national Noncompete and Trade Secrets team.

A national leader in family and labor and employment law, Zashin & Rich represents large publicly traded and privately held businesses, non-profit organizations, and public-sector entities. Its Employment and Labor Group is one of the largest in the state of Ohio, with offices in Cleveland and Columbus.
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Thursday, October 17, 2019

EMPLOYMENT LAW QUARTERLY | Volume XXI, Issue iii

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City of Toledo Joins Cincinnati, Passes Salary History Ban

By Scott H. DeHart*

The City of Toledo passed Ordinance No. 173-19, which generally prohibits Toledo employers with at least fifteen employees from seeking an applicant’s prior salary information. Toledo joins a growing number of states and municipalities that have enacted similar bans, including the City of Cincinnati in March of 2019. Accordingly, Toledo employers should determine whether they are subject to the law and, if so, implement necessary changes to existing practices to ensure compliance with the ordinance when it becomes effective on June 26, 2020.

“Prohibition on Inquiring About or Use of Salary History”
Beginning on June 26, 2020, covered employers in Toledo cannot seek, use, or otherwise rely upon an applicant’s salary history during the hiring process. Notable exceptions include discussions of salary and benefit expectations, internal transfer or promotion, “voluntary and unprompted disclosure” of salary history, and applicants governed by a collective bargaining agreement. The ordinance also requires an employer to provide an applicant the applicable pay scale for the position following an offer of employment, but only upon “reasonable request.”

Remedies and Statute of Limitations
In the event the ordinance is violated, the applicant can seek “compensatory damages, reasonable attorney’s fees, the costs of the action, and such legal and equitable relief as the court deems just and proper.” The applicant must initiate any such action within two years.

Toledo has joined a growing number of jurisdictions outlawing inquiry into an applicant’s salary history, passing an ordinance similar to that passed by the City of Cincinnati just months earlier. Given this trend, employers should expect other cities to pass similar laws. Toledo employers should begin preparations and implement necessary changes to existing practices to ensure compliance with the ordinance when it becomes effective in June 2020.

*Scott H. DeHart, who works in the Columbus office, practices in all areas of labor and employment law. If you have questions about this ordinance or about inquiry into an applicant’s salary history, please contact Scott at shd@zrlaw.com or (614) 224-4411.



Use it or Lose it: U.S. Supreme Court Holds That Title VII Defendants Must Raise Charge-Filing Defense in a Timely Manner

By Tiffany Henderson*

Before an employee can file a lawsuit under Title VII of the Civil Rights Act of 1964 (“Title VII”), which prohibits discrimination based on an employee’s race, color, religion, sex, or national origin, the employee must file a Charge of Discrimination with the Equal Employment Opportunity Commission (“EEOC”) or the employee’s state’s equivalent of the EEOC. In Ohio, the state equivalent to the federal EEOC is the Ohio Civil Rights Commission. Generally, employees must file their Charge of Discrimination within 180 calendar days of the day the discrimination occurred or, if in a state like Ohio that has its own state agency, within 300 calendar days of the date that the discrimination occurred.

On June 3, 2019, the U.S. Supreme Court unanimously held that Title VII’s “charge-filing requirement” is not “jurisdictional,” i.e., grounds for dismissal at any point during litigation. Fort Bend County, Texas v. Davis, 139 S. Ct. 1843 (June 3, 2019). Instead, employers must raise the objection in a timely manner or they forfeit the defense. So, if an employee sues its current or former employer under Title VII, and the employee incorrectly or insufficiently filed a Charge of Discrimination with the EEOC or equivalent state agency, then the employer cannot wait until the later stages of the litigation to object on these grounds.

In Davis, an employee filed an EEOC Charge of Discrimination against her employer alleging sexual harassment and retaliation. While the EEOC processed her charge, the employer fired the employee after she did not show up to work due to a conflict with a church commitment. The employee then attempted to amend her EEOC Charge to include an allegation for religious discrimination by making a handwritten notation on her EEOC intake questionnaire. However, she did not amend her formal EEOC Charge.

After the EEOC notified the employee of her right to sue, she filed a lawsuit in federal court and asserted claims including sexual harassment, retaliation, and religious discrimination under Title VII. After litigating the case for years, the employer moved – for the first time – to dismiss the religious-discrimination claim. The employer argued that the court lacked jurisdiction over the claim because the employee failed to properly assert it in her EEOC Charge. The district court agreed and dismissed the claim. On appeal, the Fifth Circuit reversed and reinstated the claim. The U.S. Supreme Court agreed to hear the case and decide whether Title VII’s charge-filing requirement was a jurisdictional precondition that can be raised at any stage of a lawsuit or a “procedural prescription” that the employer must raise in a timely manner or risk forfeiting. The U.S. Supreme Court picked the latter.

In Davis, the U.S. Supreme Court noted that Title VII’s language regarding the charge-filing requirement focuses on a party’s procedural obligations, not a court’s jurisdiction. Accordingly, the Court held that the charge-filing requirement is not “jurisdictional,” and thus an employer forfeits the objection if it does not raise it in a timely manner. The Court contrasted the “harsh consequences” of jurisdictional objections, which can dissolve a claim at any point in the litigation (even in front of the U.S. Supreme Court), against a party’s argument that the other party failed to comply with a claim-processing rule, which the objecting party forfeits if it “waits too long to raise the point.” The U.S. Supreme Court never specified what amounts to waiting “too long to raise the point.”

The U.S. Supreme Court also confirmed that the EEOC charge-filing requirement is mandatory. Accordingly, upon an employer’s timely objection, a Title VII plaintiff’s failure to abide by the requirement will prove fatal to their lawsuit. Employers who are facing a Title VII lawsuit should consult with counsel to determine whether this procedural defense may exist.

*Tiffany Henderson practices in all areas of labor and employment law. If you have questions regarding the U.S. Supreme Court’s Davis decision or any other employment law issues, please contact Tiffany at tsh@zrlaw.com or (216) 696-4441.



Companies Must Make Reasonable Efforts to Maintain the Confidentiality of their Trade Secrets if They Want Courts to Protect Them

By Ami J. Patel*

For information to be considered a trade secret, it must be sufficiently secret to impart economic value because of (1) its relative secrecy and (2) the owner of the information must take reasonable efforts to maintain the secrecy of the information. Recent case law serves as a reminder that to obtain trade secret protection from the courts, the second, often overlooked component of the “trade secret” rule is pivotal. In litigating trade secret misappropriation under the federal Defend Trade Secrets Act (“DTSA”) and applicable state law, it is not enough for companies to simply show the existence of a trade secret. Companies must show they took appropriate measures and had proper policies and procedures in place to protect their trade secret information.

A federal court recently reiterated this principle in Abrasic 90 Inc. v. Weldcote Metals, Inc., 364 F. Supp. 3d 888 (N.D. Ill. 2019). In Abrasic, defendant Joseph O’Mera was president and a director of the plaintiff Camel Grinding Wheels, U.S.A. (“CGW”), which produced abrasive products. In his capacity as president, O’Mera developed and oversaw various aspects of CGW’s operations, played the primary role in negotiating costs with CGW’s suppliers, and set CGW’s prices for its entire product line and approved all pricing discounts. In 2018, O’Mera left CGW to start a competing abrasives business for Weldcote Metals, Inc. (“Weldcote”). When he left, O’Mera took files containing information about CGW’s pricing, customers, and suppliers. Additional employees who also took files containing information about CGW’s pricing, customers, and suppliers, followed O’Mera to Weldcote. Further, O’Mera convinced one such employee to bring customer pricing documents from CGW’s shared drive.

CGW filed suit against its former employees and Weldcote and moved to enjoin the defendants from entering the abrasives business, from doing business with CGW’s suppliers or distributors, and from using the information at issue. The information at issue included compilations of CGW’s pricing and sales data. Notably, the court held that this type of information could be a trade secret under the law. However, the court denied CGW’s motion for a preliminary injunction under DTSA and the Illinois Trade Secrets Act, because CGW had taken “almost no measures to safeguard the information that it now maintains was invaluable to its competitors.”

According to the court, CGW could have taken the following data security measures, but did not:
  1. Requiring its employees to enter into non-disclosure and confidentiality agreements. CGW failed to require those with access to its supposed trade secrets to enter into non-disclosure and confidentiality agreements. The court described this as “among the most fundamental omissions by the company.”
  2. Establishing and implementing policies concerning the confidentiality of the company’s business information. CGW’s employee handbook did not have a policy regarding confidentiality beyond a “vague, generalized admonition about not discussing CGW business outside of work,” which “did not define, delineate, or specify which information was considered confidential.” The court determined this was “too broad and vague to confer meaningful protection over the information at issue.”
  3. Training company employees about their obligation to keep certain categories of information confidential. In the absence of a confidentiality policy, CGW further “did nothing to train or instruct employees about their obligation to keep certain categories of information confidential.”
  4. Ensuring all confidential information is returned to the company upon the cessation of employment of any employee with access to such information. Although CGW instructed departing employees to return CGW “property,” these employees “were not asked whether they possessed any of the information at issue or instructed to return or delete such information.” The court noted that merely requiring that departing employees return company property is not enough, and that company precautions “must go beyond normal business practices for the information to qualify for trade secret protection.”
  5. Ensuring that employees with responsibility for maintaining the security of sensitive company data and information are trained in data security and IT management. CGW’s IT management person had “no training in data security (or virtually any other area of IT management) and was ill-equipped to identify, much less champion, sound data security practices.”
  6. Ensuring that the company maintains and implements comprehensive data security policies and practices. CGW’s IT management practices were “grossly inadequate to prevent unauthorized access and use of the company’s purportedly valuable proprietary information.” Further, CGW’s IT person recommended to the company internally that it “take some basic steps to improve the security of the information at issue,” such as segregating access to documents on a need-to-know basis and adopting an “acceptable device use policy.” CGW, however, failed to implement “even these modest suggestions, further undermining its trade secret claim.”
  7. Restricting access to sensitive company information to employees on a need-to-know basis, such as assigning employees passwords to access the information. The entire contents of CGW’s shared drive were accessible to employees who did not need access to this information. Further, the IT management person always granted any request for access that was made of her and she “did not make any meaningful inquiry into whether the person needed access to the information.”
  8. Differentiating access and protective measures with respect to sensitive company information from those imposed with respect to non-sensitive company information. The court disfavored the manner in which the information was stored on CGW’s shared drive. CGW provided all employees with the same password to obtain access to the shared drive. Files were not encrypted, and there were no restrictions on employees’ ability to access, save, copy, print, or email the information. Further, there was no evidence that employees needed the authorization of the IT management person to obtain access to the shared drive. Rather, any employee could have enabled their own workstation to access the shared drive with minimal knowledge or assistance. Moreover, the documents on the shared drive were not segregated from other files that were not trade secrets and the documents were not labeled in any manner as “confidential” or “proprietary.” The court noted that it “takes virtually no effort and little sophistication to include a heading on an Excel spreadsheet identifying a document as ‘proprietary’ or ‘confidential,’ yet CGW failed even to do that much with respect to the information at issue.”

The lesson from Abrasic is clear: to claim information is a statutory trade secret, companies need to employ reasonable security measures to protect that information. While companies need not implement each and every measure discussed above, it is imperative that they take heed of these measures.

*Ami J. Patel practices in all areas of labor and employment law. If you have questions regarding protecting your company’s trade secret information or any other employment law issues, please contact Ami at ajp@zrlaw.com or (216) 696-4441.



Letter of the Law: U.S. Department of Labor’s Wage and Hour Division Continues Issuing Opinion Letters

By Michele L. Jakubs*

In 2018, the U.S. Department of Labor's Wage and Hour Division (“DOL”) reinitiated its practice of issuing opinion letters. The DOL’s opinion letters offer official guidance addressing how a particular law, such as the Family and Medical Leave Act (“FMLA”) and Fair Labor Standards Act (“FLSA”), applies in specific circumstances. These letters also serve as important guidance for other employers faced with similar circumstances and compliance concerns. Although the letters are not binding precedent, they can help bolster arguments made by employers.

Since 2018, the DOL has released a steady stream of opinion letters (available through this link). Just this year, the DOL already has issued over a dozen opinion letters offering guidance on specific issues under the FMLA and the FLSA. A summary of some important opinion letters is provided below.

Opinion Letter FMLA 2019-1-A (available here)

This opinion letter addresses whether an employer may permit employees to exhaust some or all available paid sick (or other) leave prior to designating leave as FMLA qualifying, even when the leave clearly is FMLA qualifying. The DOL’s answer is a resounding no.

The individual submitting this request for an opinion stated that employers often justify this practice pursuant to language in the FMLA regulations, 29 C.F.R. §825.700, which in relevant part states that “[a]n employer must observe any employment benefit or program that provides greater family and medical leave rights to employees than the rights provided by the FMLA.” However, the DOL’s response is clear that an employer may not delay the designation of FMLA-qualifying leave as FMLA leave. “Once an employee communicates a need to take leave for a FMLA-qualifying reason, neither the employee nor the employer may decline FMLA protection for that leave. Accordingly, when an employer determines that leave is for an FMLA-qualifying reason, the qualifying leave is FMLA-protected and counts toward the employee’s FMLA leave entitlement.” Further, pursuant to the FMLA regulations, “once the employer has enough information to make this determination, the employer must, absent extenuating circumstances, provide notice of the designation within five business days, and may not delay designating leave as FMLA-qualifying, even if the employee would prefer the delay.” 29 C.F.R. §825.300(d)(1).

The DOL reconciles the language in 29 C.F.R. §825.700, i.e., the regulation cited in the underlying request for an opinion, with the opinion set forth in its letter, stating “[o]f course an employer must observe any employment benefit or plan that provides greater family or medical leave rights to employees than the rights established by the FMLA, [b]ut providing such additional leave outside of the FMLA cannot expand the employee’s 12-week (or 26 week) entitlement. [If] an employee substitutes paid leave for unpaid FMLA leave, the employee’s paid leave counts toward his or her 12-week (or 26-week) FMLA entitlement and does not expand that entitlement.”

This opinion may create additional confusion for employers in the Ninth Circuit, which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. In 2014, the Ninth Circuit Court of Appeals concluded that an employee can decline FMLA leave and use paid leave instead, even though the underlying reason for leave would have been FMLA-qualifying. Escriba v. Foster Poultry Farms, 743 F.3d 123, 1244 (9th Cir. 2014). In issuing this opinion letter, the DOL noted its disagreement with the Escriba decision in a footnote.

Opinion Letter FLSA 2019-2 (available here)

This opinion letter addresses whether time spent participating in an employer’s optional volunteer program constitutes “hours worked” requiring compensation under the FLSA. The answer is no, unless such time is forced.

The program at issue in the opinion letter is an employer-sponsored optional community service program for employees, where employees can choose to engage in certain volunteer activities. Under the program, the employer compensates employees for time they spend on volunteer activities during normal working hours or while they are required to be on the employer’s premises, but activities which take place outside of normal working hours are not compensated. At the end of the year, the employer awards a monetary bonus to certain participating employees based on the total overall hours each employee volunteered.

Relying on a previous opinion letter concerning volunteer activities, the DOL notes that “[a]n employer may use an employee’s time spent volunteering as a factor in calculating whether to pay the employee a bonus, without incurring an obligation to treat that time as hours worked, so long as (1) volunteering is optional, (2) not volunteering will have no adverse effect on the employee, and (3) the employee is not guaranteed a bonus for volunteering.” FLSA 2006-4.

The DOL concluded that participation in the program at issue does not count as hours worked under the FLSA because: (1) the employer does not require participation in the program nor control or direct volunteer work; (2) employees do not appear to suffer adverse employment consequences if they do not participate in the program; and (3) the employer does not guarantee participating employees a bonus for volunteering.

The DOL also confirmed that an employer can use a mobile device application to track a participating employee’s time spent volunteering, provided that this application is not used to direct or control the volunteering activities.

Opinion Letter FLSA 2019-9 (available here)

This opinion letter addresses whether an organization used permissible rounding practices when calculating its employees’ hours worked. The organization at issue used payroll software to calculate its employees’ hours worked and wages. Based on clock in and clock out times, the software would convert an employee’s hours worked each day into a numerical figure that would be rounded based upon whether the third decimal fell below .005. For example, if the software initially calculated an employee’s hours worked in a single day to be 6.865, that figure would be rounded up to 6.87 for purposes of calculating the employee’s pay for that day. However, if the initial figure was 6.864, then the software would use 6.86 for purposes of calculating the employee’s pay for the day.

The DOL found that this rounding practice was consistent with the FLSA’s regulations. The DOL explained it has been its “policy to accept rounding to the nearest five minutes, one-tenth of an hour, one-quarter of an hour, or one-half hour as long as the rounding averages out so that the employees are compensated for all the time they actually work.” The specific rounding practice at issue was neutral on its face and appeared to average out. Therefore, the DOL opined that, consistent with the FLSA’s regulations, the rounding practice “will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” 29 C.F.R. § 785.48(b)

Conclusion

The key takeaways from the opinion letters summarized above are the following:
  • Employers may not permit employees to exhaust some or all available paid sick (or other) leave prior to designating leave as FMLA-qualifying. When an employer determines that leave is for a FMLA-qualifying reason, the qualifying leave is FMLA-protected and counts toward the employee’s FMLA leave entitlement.
  • Employers will not incur an obligation to treat an employee’s time spent volunteering as “hours worked” under the FLSA, so long as such time is not forced, i.e., (1) volunteering is optional, (2) not volunteering will have no adverse effect on the employee, and (3) the employee is not guaranteed a bonus for volunteering.
  • In determining employees’ hours worked, employers may use rounding practices, so long as those practices are neutral and average out so that the employer compensates its employees for all the time its employees actually worked.
The DOL’s opinion letters provide valuable insight regarding the intricacies of the FMLA and the FLSA and how these laws apply under specific circumstances. The attorneys at Zashin & Rich regularly provide guidance to employers regarding the nuances of the FMLA and the FLSA and counsel employers on such policies and procedures. Employers should consult with counsel to assess whether their FMLA and FLSA policies and procedures remain compliant with these ever-evolving laws.

*Michele L. Jakubs, an OSBA Certified Specialist in Labor and Employment Law, practices in all areas of labor and employment law. If you have questions regarding the DOL’s opinion letters, or the FMLA or the FLSA, please contact Michele at mlj@zrlaw.com or (216) 696-4441.



Z&R SHORTS


Please join Z&R in welcoming Tiffany Henderson and Ryan Spitzer to its Employment and Labor Groups


Tiffany Henderson practices out of Z&R’s Cleveland office. Her practice encompasses all areas of private and public sector labor and employment law. Tiffany graduated from Bowling Green State University and received her Master of Public Administration and her Juris Doctor (cum laude) from Cleveland State University and Cleveland-Marshall College of Law, respectively. As a law student, Tiffany served as Student Bar Association President, Director of Pre-Law and Recording Secretary for the Black Law Students Association, and was a member of the mock trial advocacy team. Tiffany also received the Norman S. Minor Scholarship and Cleveland-Marshall Law Alumni Association Life Member Scholarship. Prior to joining Z&R, Tiffany served as an Assistant Attorney General at the Ohio Attorney General’s Office. Before practicing law, Tiffany worked with PPG in Cleveland, Ohio as an Information Technology Systems Analyst.

Ryan Spitzer practices out of Z&R’s Columbus office and represents public and private sector employers in all aspects of labor and employment law. Ryan graduated from the Ohio State University and earned his law degree cum laude from Capital University with a concentration in civil litigation. As a law student, Ryan participated in the Fall National Moot Court Team and was an extern for Chief Justice Maureen O’Connor at the Ohio Supreme Court. Prior to joining Z&R, Ryan worked for the Miami County Prosecuting Attorney’s Office where he handled both civil and criminal matters and was appointed as a Special Assistant Prosecuting Attorney in multiple counties.


Congratulations to Stephen Zashin, Helena Oroz, and Jeffrey Wedel on their Recent Win before the Ohio Supreme Court


Z&R congratulates Stephen Zashin, Helena Oroz, and Jeff Wedel on their recent success before the Ohio Supreme Court in Gembarski v. PartsSource, Inc., 2019-Ohio-3231 (Aug. 14, 2019). The case is a significant win for employers. The Ohio Supreme Court held that when a single named plaintiff files an action on behalf of a class of employees, but is not bound by an arbitration agreement to which other members of the putative class action may be bound, the employer need not raise an arbitration defense at the pleading stage. Instead, the employer may wait and raise such a defense at the class-certification stage of the proceedings.

Upcoming Speaking Engagements


November 4, 2019
Jonathan J. Downes presents “Keys to Successful Negotiations” and “Negotiation Practice on Specific Issues” at the State Employment Relation Board (SERB) Advanced Negotiations Seminar. The seminar will take place at the State Library in Columbus, Ohio.

December 4, 2019
George S. Crisci will be part of a panel presentation entitled “Labor Law Hot Topics” at the Ohio State Bar Association’s National Labor Relation Board (NLRB) Updates seminar. The panel presentation will take place at the Ohio State Bar Association in Columbus, Ohio.

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